Husky Energy's Reserves Increase Along With Production Growth

Husky Energy's Reserves Increase Along With Production Growth
CALGARY, ALBERTA -- (Marketwired) -- 03/10/14 -- Highlights:
-- Average proved three-year reserves replacement ratio of 172 percent,
excluding economic factors
-- 1.3 billion barrels of oil equivalent (boe) total proved reserves before
royalties
-- Proved reserves life index of 11.1 years, up from 10.3 in 2011 and 10.8
in 2012
Husky Energy's (TSX: HSE) reserves growth outpaced its production in
2013 as a result of the addition of reserves in its Oil Sands
business, the full-scale development of the Ansell liquids-rich gas
resource play and increased heavy oil recovery from thermal
developments in Western Canada.
Husky has increased its 2014 production guidance to the range of
330,000 to 355,000 boe/day and remains on track to achieve its
production growth rate target of five to eight percent from 2012
through 2017.
The Company has realized an average proved reserves replacement ratio
over the past three years of 172 percent, excluding economic factors.
Including economic factors, the average proved three-year reserves
replacement ratio is 154 percent, ahead of the five-year average
target of 140 percent per year. The reserves replacement ratio in
2013 was 166 percent, excluding economic factors (164 percent
including economic factors such as the low gas price environment
during the year.)
Reserves growth reflects a broad portfolio of assets, which provide
for organic growth without dependency on acquisitions and a flexible
timeline for optimal development.
At the end of the year in 2013, the Company had total proved reserves
before royalties of 1.3 billion barrels of oil equivalent (boe),
probable reserves of 1.9 billion boe and best estimate contingent
resources of 13.2 billion boe. The Company's Oil Sands portfolio was
responsible for 11.6 billion boe of the best estimate contingent
resources total.
2013 Reserves Reconciliation (1)
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(Figures represented in
millions of barrels of
oil equivalent) Proved Probable TOTAL
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Developed Undeveloped Total
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Dec. 31, 2012 729 463 1,192 1,723 2,915
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Production (114) 0 (114) 0 (114)
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Acquisitions 0 1 1 3 4
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Divestitures (1) 0 (1) 0 (1)
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Additions (2) 34 108 142 212 354
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Transfers 97 (97) 0 (73) (73)
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Technical Revisions 50 (2) 48 2 50
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Economic Factors (3) 0 (3) (5) (8)
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Dec. 31, 2013 792 473 1,265 1,862 3,127
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(1) Reserves are based on Canadian National Instrument 51-101 (NI 51-101)
rules, which require the use of year-end forecast prices
(2) Additions = Discoveries + Extensions + Improved Recovery
SELECT HIGHLIGHTS:
Foundation
-- Proved reserves in Western Canada, including Heavy Oil and excluding Oil
Sands, were 872 million boe as of December 31, 2013.
-- New heavy oil thermal projects and improved recovery from existing heavy
oil thermal developments resulted in the booking of an additional 127
million barrels in probable reserves.
-- Additional drilling locations at the Ansell liquids-rich gas resource
play in Western Canada contributed to the booking of an additional 32
million boe of natural gas and natural gas liquids in proved undeveloped
reserves. Plans are being advanced to increase production from Ansell to
approximately 30,000 boe/day in the next few years.
Growth Pillars
-- Additional drilling locations at the Sunrise Energy Project added a
further 39 million barrels (Husky W.I.) of proved undeveloped bitumen
reserves in 2013. Sunrise has estimated proved plus probable plus
possible reserves of 3.7 billion barrels of bitumen (0.44 billion
proved, 2.40 billion probable and 0.86 billion possible) as of December
31, 2013. Husky has a 50 percent working interest in the reserves.
-- Sanction of the South White Rose extension in the Atlantic Region in
2013 added an additional seven million barrels of light oil in proved
undeveloped reserves.
Afull reporting of the Company's oil and natural gas reserves data for
the year ended December 31, 2013 has been included in the Company's
Annual Information Form (AIF), which was filed with securities
regulators on March 6, 2014 on the Canadian System for Electronic
Document Analysis and Retrieval (SEDAR), and the U.S. Electronic Data
Gathering, Analysis and Retrieval (EDGAR) System. It may be accessed
electronically at www.sedar.com and www.sec.gov. Both the Canadian
and U.S. disclosure documents may also be accessed electronically
from Husky's website at www.huskyenergy.com
Husky Energy is one of Canada's largest integrated energy companies.
It is headquartered in Calgary, Alberta, Canada and is publicly
traded on the Toronto Stock Exchange under the symbol HSE and
HSE.PR.A. More information is available at www.huskyenergy.com
FORWARD-LOOKING STATEMENTS
Certain statements in this news release are forward-looking
statements and information (collectively "forward-looking
statements"), within the meaning of the applicable Canadian
securities legislation, Section 21E of the United States Securities
Exchange Act of 1934, as amended, and Section 27A of the United
States Securities Act of 1933, as amended. The forward-looking
statements contained in this news release are forward-looking and not
historical facts.
Some of the forward-looking statements may be identified by
statements that express, or involve discussions as to, expectations,
beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, through the use of words or
phrases such as "will likely result", "are expected to", "will
continue", "is anticipated", "is targeting", "estimated", "intend",
"plan", "projection", "could", "aim", "vision", "goals", "objective",
"target", "schedules" and "outlook"). In particular, forward-looking
statements in this document include, but are not limited to,
references to:
-- with respect to the business, operations and results of the Company
generally: the Company's 2014 production guidance; the Company's five-
year average target reserves replacement ratio; and the Company's
ability to achieve its production growth rate target through 2017; and
-- with respect to the Company's Western Canadian oil and gas resource
plays: the planned increase in production from the Company's Ansell
resource play in the next few years.
In addition, statements relating to "reserves" and "resources" are
deemed to be forward-looking statements as they involve the implied
assessment based on certain estimates and assumptions that the
reserves or resources described can be profitably produced in the
future. There are numerous uncertainties inherent in estimating
quantities of reserves and resources and in projecting future rates
of production and the timing of development expenditures. The total
amount or timing of actual future production may vary from reserve,
resource and production estimates.
Although the Company believes that the expectations reflected by the
forward-looking statements presented in this document are reasonable,
the Company's forward-looking statements have been based on
assumptions and factors concerning future events that may prove to be
inaccurate. Those assumptions and factors are based on information
currently available to the Company about itself and the businesses in
which it operates. Information used in developing forward-looking
statements has been acquired from various sources including
third-party consultants, suppliers, regulators and other sources.
Because actual results or outcomes could differ materially from those
expressed in any forward-looking statements, investors should not
place undue reliance on any such forward-looking statements. By their
nature, forward-looking statements involve numerous assumptions,
inherent risks and uncertainties, both general and specific, which
contribute to the possibility that the predicted outcomes will not
occur. Some of these risks, uncertainties and other factors are
similar to those faced by other oil and gas companies and some are
unique to Husky.
The Company's Annual Information Form for the year ended December 31,
2013 and other documents filed with securities regulatory authorities
(accessible through the SEDAR website www.sedar.com and the EDGAR
website www.sec.gov) describe the risks, material assumptions and
other factors that could influence actual results and are
incorporated herein by reference.
Any forward-looking statement speaks only as of the date on which
such statement is made, and, except as required by applicable
securities laws, the Company undertakes no obligation to update any
forward-looking statement to reflect events or circumstances after
the date on which such statement is made or to reflect the occurrence
of unanticipated events. New factors emerge from time to time, and it
is not possible for management to predict all of such factors and to
assess in advance the impact of each such factor on the Company's
business or the extent to which any factor, or combination of
factors, may cause actual results to differ materially from those
contained in any forward-looking statement. The impact of any one
factor on a particular forward-looking statement is not determinable
with certainty as such factors are dependent upon other factors, and
the Company's course of action would depend upon its assessment of
the future considering all information then available.
Disclosure of Oil and Gas Information
Unless otherwise stated, reserve and resource estimates in this
document have an effective date of December 31, 2013 and represent
Husky's share. Unless otherwise noted, historical production numbers
given represent Husky's share.
The Company uses the terms barrels of oil equivalent ("boe"), which
is calculated on an energy equivalence basis whereby one barrel of
crude oil is equivalent to six thousand cubic feet of natural gas.
Readers are cautioned that the term boe may be misleading,
particularly if used in isolation. This measure is primarily
applicable at the burner tip and does not represent value equivalence
at the wellhead.
Reserve replacement ratios for a given period are determined by
taking the Company's incremental proved reserve additions for that
period divided by the Company's upstream gross production for the
same period. Forecast reserve replacement ratios for a given period
are calculated by taking the forecast proved reserve additions for
those periods divided by the forecast gross production for the same
periods.
The Company has disclosed possible reserves. Possible reserves are
those additional reserves that are less certain to be recovered than
probable reserves. It is unlikely that the actual remaining
quantities recovered will exceed the sum of proved plus probable plus
possible reserves. There is a 10 percent probability that the
quantities actually recovered will equal or exceed the sum of proved
plus probable plus possible reserves.
The estimates of reserves for individual properties may not reflect
the same confidence level as estimates of reserves for all
properties, due to the effects of aggregation. The Company has
disclosed its total reserves in Canada in its Annual Information Form
for the year ended December 31, 2013, which reserves disclosure is
incorporated by reference herein.
The Company has disclosed best-estimate contingent resources of 13.2
billion boe, which is comprised of 12.0 billion bbls of crude oil and
6.5 tcf of natural gas. Of the total, 11.0 billion boe is economic at
year-end 2013.
Contingent resources are those quantities of petroleum estimated, as
of a given date, to be potentially recoverable from known
accumulations using established technology or technology under
development, but which are not currently considered to be
commercially recoverable due to one or more contingencies.
Contingencies may include factors such as economic, legal,
environmental, political and regulatory matters, or a lack of
markets. There is no certainty that it will be commercially viable to
produce any portion of the contingent resources.
Contingent resources are reported as the working interest volumes and
Husky's working interest varies in the properties. The properties
assigned contingent resources are Western Canada gas resource plays
and EOR projects, Lloydminster thermal projects, N.W.T. conventional
gas, oil sands, Atlantic Region and Asia Pacific gas.
Best estimate as it relates to resources is considered to be the best
estimate of the quantity that will actually be recovered. It is
equally likely that the actual remaining quantities recovered will be
greater or less than the best estimate. Estimates of contingent
resources have not been adjusted for risk based on the chance of
development.
There is no certainty as to the timing of such development. For
movement of resources to reserves categories, all projects must have
an economic depletion plan and may require, among other things: (i)
additional delineation drilling for unrisked contingent resources;
(ii) regulatory approvals; and (iii) Company and partner approvals to
proceed with development.
Specific contingencies preventing the classification of contingent
resources at the Company's oil sands properties as reserves include
further reservoir studies, delineation drilling, facility design,
preparation of firm development plans, regulatory applications and
company approvals. Development is also contingent upon successful
application of SAGD and/or Cyclic Steam Stimulation (CSS) technology
in carbonate reservoirs at Saleski, which is currently under active
development. Positive and negative factors relevant to the estimate
of oil sands resources include a higher level of uncertainty in the
estimates as a result of lower core-hole drilling density.
Specific contingencies preventing the classification of contingent
resources at the Company's Atlantic Region discoveries as reserves
include additional exploration and delineation drilling, well
testing, facility design, preparation of firm development plans,
regulatory applications, Company and partner approvals. Positive and
negative factors relevant to the estimate of Atlantic Region
resources include water depth and distance from existing
infrastructure.
Note to U.S. Readers
The Company reports its reserves and resources information in
accordance with Canadian practices and specifically in accordance
with National Instrument 51-101, "Standards of Disclosure for Oil and
Gas Disclosure", adopted by the Canadian securities regulators.
Because the Company is permitted to prepare its reserves and
resources information in accordance with Canadian disclosure
requirements, it uses certain terms in this document, such as
"possible reserves" and "best estimate contingent resources", that
U.S. oil and gas companies generally do not include or may be
prohibited from including in their filings with the SEC.
Contacts:
Investor Inquiries:
Dan Cuthbertson
Manager, Investor Relations
Husky Energy Inc.
403-298-6817
Media Inquiries:
Mel Duvall
Manager, Media & Issues
Husky Energy Inc.
403-513-7602